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Executives

Chris Garabedian - President and Chief Executive Officer

Analysts

Sara Slifka - Morgan Stanley

Sarepta Therapeutics Inc. (SRPT) Morgan Stanley Global Healthcare Conference Call September 9, 2013 1:50 PM ET

Sara Slifka – Morgan Stanley

All right, I think we’ll go ahead and get started. For those of you that don’t know, me I’m Sara Slifka, I'm one of the biotech analysts at Morgan Stanley. And I’m very happy to have Sarepta here with us, and we have Chris Garabedian, CEO and President of Sarepta. So, maybe just to start, if you can, for those who are less familiar with the story, just give us a brief overview of what is going on, your lead asset, and maybe recent announcements that you guys have put out.

Chris Garabedian

Sure, yes so, thanks for the invitation Sara, it’s a pleasure to be here at Morgan Stanley Conference. So, Sarepta is an RNA-based technology company, our lead program is in Duchenne Muscular Dystrophy, our lead product in development eteplirsen is in a Phase IIb extension study. We’ve recently shared that Phase II data with the FDA over the last six months, and they recently in July communicated that they are open to considering an NDA filing based on the data we’ve shared with them or not requiring a confirmatory study before they would consider an NDA filing. So, we had communicated that we would be submitting an NDA, New Drug Application, in the first half of next year, we have an upcoming CMC meeting on the calendar with the FDA, and that’s the update for now.

Sara Slifka – Morgan Stanley

Okay great. So maybe since everyone is focused on the accelerated approval, have you gotten the FDA meeting minutes back, and are there – is there anything new in there, that we should be aware of?

Chris Garabedian

Yes, so well, we communicated the day after the FDA meeting took place where it was very clear that they were open to considering an NDA filing, so that’s when we communicated that detail in July. We did get our meeting minutes that came about a month later, and it was very consistent to what we had communicated. At that time, we communicated that the FDA wanted additional information on our dystrophin methodology and data on verifying the dystrophin quantification.

We have a little more clarity now on that, and this is a continuing dialog, but we got a request to make available to them the images from our initial dystrophin analysis. This would be our baseline images; our 12 week, 24 week, and 48 week images, of which we do have and we can provide to them along with a methodology in which they could independently or we could find an independent reviewer to quantify that. So again, this was a dialog, we’re still discussing the details of that and preparing recommendations of how we may do that.

The other thing they wanted to do was any subsequent biopsies that we would have that we get greater alignment from the FDA on exactly what we will do with new biopsy samples. So this is not only verifying our immunofluorescence quantification, but anything else that they may want to see from biopsy tissue samples in future biopsies, we would be working with them to figure out what that is. So, whether that be by blotting methods or whether that would be by RT-PCR or anything else they may want to see with subsequent biopsies.

This was not an indication of the lack of strength of our current biopsy analysis and data, but obviously this has become a more important issue for them as they consider dystrophin as a surrogate, and so they want to make sure that moving forward that they have a say in exactly the thoroughness of that biopsy analysis.

The other thing they asked us to explore is the idea of a fourth biopsy in our current ongoing extension study. So, we explained to them that this could be difficult given that we would need to get IRB approvals and amend the extension protocol to include a fourth biopsy of the 12-patients in our ongoing extension study, and we also indicated that we may not get support from the parents themselves of the boys to go into surgery fourth time after we’ve already demonstrated dystrophin in all of these boys at the 48-week time point.

They, in their words, they encouraged us to speak with the parents about the feasibility of this fourth biopsy, so that’s something we will be doing to understand if it is feasible, but what we have told them is that we do intend to have biopsies taken in our confirmatory study, and that we would work closely with them to make sure that any subsequent biopsies we took from the eteplirsen confirmatory study would be in alignment with what they would you like to see.

Sara Slifka – Morgan Stanley

Okay great. Are there any questions from the audience? So last month or a few weeks ago, there was some data released for one of your competitors that caused a little concern, and I think the general concern was that it is actually a similar technology, but benefits weren’t seeming to correlate that well with dystrophin production. So, do you have a view on whether this is going to kind of hurt your chances at the FDA or the differences between your drug and Prosensa’s (inaudible) drug and to why you are not seeing a rate correlation there?

Chris Garabedian

Yes, we don’t like to comment on competitor datasets, but we do look forward to the emerging dataset that we expect in the coming months on drisapersen . Look, we believe that our dataset stands by itself and that we have shown not only a very favorable safety profile in patients who have taken the drug for nearly two years, we also have biochemical data that’s very consistent across genotypes, across samples within patients and then across all 12 patients in our study in a range that it’s really been unprecedented of 30% to 60% range of dystrophin-positive fibers, and we are seeing clinical benefit conferred by that dystrophin production.

So, we think it’s very important to show all three of those elements, a strong safety profile that allows for chronic dosing in a pediatric population, biochemical response that is consistent across 100% of the patients at levels that would be (inaudible) and a clinical benefit that correlates -- that supports the dystrophin that we are seeing.

I think we would like – we did hear about the recent topline dystrophin where upwards of more than a quarter to 40% of patients did not show dystrophin increases by any measure that they were evaluated on. So, the criteria was any dystrophin increase which was not defined by any measure of either RQ-PCR immunofluorescence or western blot. That’s a very low threshold to show dystrophin, and they still didn’t need it in 100% of the patients using that criteria.

So conversely, we were showing 100% of the patients at 12 weeks even in our previous U.K. study at lower doses by RT-PCR. So again, we think we have a strong dataset that’s very robust and consistent across the population and that’s the message that we are going to go out to the market with.

Sara Slifka – Morgan Stanley

Great, and then where are you with manufacturing, you mentioned the CMC meeting, and if you were to get accelerated approval, how much product would you have at that point?

Chris Garabedian

Yes. So, CMC is going well. We mentioned previously that we did a test run which was a larger scale than what we had been producing at small scale that was very favorable in terms of showing comparability and a yield that’s consistent to the small-scale. We will have more information on the mid-scale production runs toward the end of this year, early next year on yield and comparability to our test batch and to our small-scale production.

We will be having a meeting with the FDA to talk about CMC issue specifically, and more importantly what will they need to see in an NDA submission. We believe we will have the data that’s needed for the first half submission of next year, but we want to get more specifics around exactly what they are going to be looking for.

That meeting has been calendared; we were previously hoping it would be by the end of this month, its now going to be in October. So, we are going to be having the CMC specific meeting in October, and again we hope to get clarity on exactly what they would like to see in the CMC section of the NDA that we will be submitting in the first of next year.

Sara Slifka – Morgan Stanley

Okay great. So it seems like even with filing next year, you are going to need a confirmatory trial, what do you expect the design of that trail look like, when can we expect it to get started, how long is it going to take?

Chris Garabedian

Yes, the confirmatory study is still on track to start dosing in the first quarter of next year. We’ve communicated a lot about what that design is going to look like. First, it’s going to be 48 weeks in duration and the primary endpoint is going to be the six-minute walk test.

This is because not only has six-minute walk been used in the other pivotal DMD trials, but it has been used as the basis for approval in other neuromuscular conditions, and it was the most predictable, the most sensitive marker and least variable that we saw of all the clinical endpoints, and we’ve seen that with other studies as well.

So, we have a lot of faith and confidence in the six-minute walk test, so that will be our primary endpoint. We indicated that we will have about 60 patients enrolled in the eteplirsen treatment arm and that we will have a control arm that consists of untreated DMD patients with the same inclusion criteria, but that are amenable to other exon targets, exon 53, exon 45, exon 50, and exon 44. We believe that population will behave similarly to what an exon 51 untreated population would behave, and we think it’s the right type of control. We also think there’s a lot in the natural history to compare with that eteplirsen treatment Arm 2.

So we have two measures in which we can power the study that we believe with 60 eteplirsen treated patients would be sufficient. We have indicated that we’re still in discussions with the FDA about the feasibility and the appropriateness of a placebo arm in addition to what I’ve described, and that is something that we have not finalized with and are still in discussions with the FDA around.

Sara Slifka – Morgan Stanley

Okay great. And then just a quick question about the inclusion criteria. Are you changing your baseline six-minute walk inclusion criteria, and the reason I ask is in the Phase II study where the two kids in the 30 mg/kg arm that declined very rapidly despite the fact that they seemed to have pretty good dystrophin production. So, how are you trying to kind of eliminate that variable?

Chris Garabedian

Yes, so we’re not disclosing specific details on inclusion criteria, but we have discussed the idea that the Phase II study may have had too relaxed of a criteria where we went down, we allowed patients anywhere from 200 meters to 400 meters walk. And a lot of the natural history that has emerged even in this past year after we designed the Phase II study really suggests that you should try to limit the lower end of that inclusion criteria to some say, no less than 350, some say no less than 330. So, we are still evaluating that because we also want to be able to enroll as many patients as is legitimate to help with enrollment times, et cetera. So we haven’t determined the details, but we may be changing those inclusion criteria to have a more predictable rate of decline and to avoid maybe those that are too far gone like we found with the twins in our Phase IIb study.

However, we are looking at a larger cohort, we do expect balance in the arms, this is why if we did enroll patients who are closer to the precipice of losing ambulation, that placebo arm becomes problematic, because you start to be borderline unethical of enrolling a patient into a placebo arm that maybe declining and have irreversible loss of ambulation.

So, that’s where on an untreated cohort where we don’t have a drug ready for exon 50, exon 53, exon 45, and exon 44, then that would be reasonable to have a balanced arm where even if we lost some patients in the eteplirsen treated, you would expect to have a similar number in the untreated cohort.

Question-and-Answer Session

Sara Slifka – Morgan Stanley

Any questions? Okay, second row.

Unidentified Analyst

I just have a couple of questions. So, the first one is regarding the CMC issues and stability data issues, and we have –there are a couple of companies that have, lets say received green lights from the FDA and nonetheless they have indicated extremely long timelines in terms of their ability to submit on the basis of all of the stability of manufacturing data that will be required by having had clinically, lets say, met or exceeded the FDA’s expectations. So I'm trying to understand a little bit assuming there is no expedited process, what would be involve in the CMC and the stability process in terms of six months, one-year stability et cetera?

And my other question is on dystrophin; obviously your position is if there is dystrophin and there is an improvement, then we have that correlation. How does it work when there is an improvement and dystrophin is not correlated? What is the position on how such a things occurred?

Chris Garabedian

Yes so I’ll try to answer both of your questions, the first question on CMC is that what we’ve been saying is we expect in the type of situation we are in which is a very devastating serious diseases that is rapidly progressive and irreversible that the FDA has showing in other circumstance to be flexible when we have a drug that could be dosed in patient to be held that the FDA shown flexibility around the amount of stability data they would need as an example.

We expect that if we were to get early approval of eteplirsen that this drug is not going to sit on the shelf and so if the FDA where to acquire six month stability. It’s not clear if drug would even need to have six months stability before its actually dosed in patients, especially in the year or two after launch.

So part of our discussion that we are going to have with the FDA in this CMC meeting in October is exactly what level of data do you need to see in the NDA. And there are few areas that we focus on, one is stability of course that is probably the most time dependent factor that would limit how much data we would have before we could submit that in FDA [ph] and maybe how many batches do they need that stability on and what a comparability they need to the smaller batch productions, that we have longer stability and more reproducible batches that we’ve been doing over the last several years.

So that stability and the comparability to the smaller batch production will be an important factor. There are other things that more check-the-box issues like what documentation on process validation do they want, as we move to these larger scale processes.

So those are things that our guidance on first half of next year is based on what we would think is a reasonable amount of flexibility to help us prepare for that NDA submission. We won’t know for sure until we have the meeting, but if anything changes from our current guidance, we would communicate coming out of that meeting. But I think we’ve been clear on what we expect would be needed in that.

I think that’s in how much drug would we have already. We’ve communicated previously that we expect that if we did get early approval and assuming all goes well, this means that the mid-scale batches and the move to large-scale has the comparability and the stability that we need to see and that the yields are comparable and assuming a 30 milligram per kilogram per week dose. We think by the end of next year, we could satisfy half to all of the market demand for eteplirsen in the U.S.

Now this is what I think maybe conservative assumption, because it assumes no competition and it assumes a uptake similar to Kalydeco in cystic fibrosis. So very rapid uptake where I believe they had 40% of the market demand in the first month. So again, anything that would be less than that type of demand or with competition, I think we more easily would meet the full commercial demand in the market.

On the second question, the notion that we believe we have high levels of dystrophin that are correlating to the clinical benefit we see, if I can understand your question, what if we saw with a drug a clinical benefit, but no evidence of dystrophin that would be hard to interpret, because I believe when you are dealing with dystrophin producing technologies who’s soul mechanism of action is design through watch and quick pairing to effect read-through and to produce a protein.

That it’s a kin to saying a cholesterol reducing agent that doesn’t show it reduces cholesterol, but has a benefit on cardiac events or to take DMV that you have utrophin up regulator that doesn’t up regulate utrophin, but were claiming it works, if you have a dystrophin producing technology that doesn’t produce dystrophin but is working and you can explain, I think that’s tough and I would want to make sure that we understood any dataset couldn’t produce dystrophin, but was claiming a clinical benefit that we hold that up to the data integrity that is needed.

Let’s look at the subset analysis, are there patients below seven years of age that maybe confounding that six minute walk trajectory. We really need to understand tease out the clinical benefit where there is a lack of or partial dystrophin response or low levels of dystrophin. We would really want to look more closely at the clinical outcomes in that situation.

Sara Slifka – Morgan Stanley

Maybe piggy backing off of that question a little bit, you have got a bunch of other Exon targeting drugs in your pipeline and you have spoken about dystrophin as being an eventual surrogate for kind of a class approval for all these drugs. What gives you confidence that with all these other Exon-Skipping drugs you are getting the same levels of functional dystrophin?

Chris Garabedian

Yes, well obviously the next real proof of concept in that is the dosing of those other exon-skipping drugs in patients to prove that we produce dystrophin and ideally dystrophin levels that are in a comparable range of what we showed with eteplirsen at a standard dose.

The reason we have been so vocal about the importance of dystrophin is that to think about streamlined development our follow-on exons and eventual class approval. Its based on the notion that that is the most reasonable pathway to gain approval in the most rapid manner of follow-on exons, because every body understands the lamination of rare genetic subtypes in a diseases like Duchenne where its infeasible and likely impossible to enroll enough patient to power a study for a clinical benefit like six minute walk test.

You get into confounding issues of these starts doing dose ranging an optimization around each exon target. So our premise is that in vitro exon-skipping efficiency can be done in a way to optimize sequence across all these other genetic subtypes. And it take can translate to a dystrophin at a standard dose in human muscle tissue that we can then start to extrapolate what we’ve proven with lets say eteplirsen of the benefit of clinical outcomes that we’re seeing.

Look we know that when you prove drugs on the basis of a surrogate like dystrophin that the FDA will likely want sponsors to follow those patient post-marketing. We would intend to do that anyway for safety for other – clinical outcomes of stability even beyond six minute walk they are probably pulmonary function and other measure. So we know that the answers will be there eventually, even in the rare genetic subtypes, but that is a not reason to stop access to these drug and commercial approval of these drugs, because we can enroll enough patient to find a clinical benefit.

Sara Slifka – Morgan Stanley

And in animals the toxicity profiles would be different, exon-skipping drug look eventually the same.

Chris Garabedian

Yes, well that’s the first step and that’s what we're doing right now, the pre-clinical programs are ongoing for our Exon-45, Exon-53 and Exon-50 programs. We started doing animal pre-clinical testing with Exon-45 already, we expect to start Exon-53 pre-clinical animal testing later this quarter. So we are on track for what we had guided previously which is a IND filing on one of those compounds by mid-next year and at least two of those compounds within IND filing by the end of next year.

Sara Slifka – Morgan Stanley

Are there good natural history that are out there to show that the different genotype essentially have the same clinical course or are there key differences between any of them?

Chris Garabedian

Yes. You know Sara, there are slight variations that there is not an abundance of data in the natural history on the various genotypes, but for the most common genotypes we do have more natural history date and some of this is unpublished and we’ve gleaned from some of the experts who have it in their databases that we’ve worked with, but what we know is that Exon-53 and 45 they behave and those are the next two most prevalent Exon targets beyond Exon-51, they behave very similarly to Exon-51, there are some evidence that Exon-44 might be a slightly milder phenotype, but just to be clear if we use that as a control then including a milder phenotype right would mean we have to have even more of a robust benefit.

So obviously we could tease that out, we could stratify or try to prospect the lead to find analysis based on the more likely genotypes that would have a similar progression, but we believe when you start to add all of these genotypes together, you would see something comparable to Exon-51 and something comparable to the broader natural history depictions in the literature.

Sara Slifka – Morgan Stanley

Okay great. Any questions? So what are your thoughts around moving eteplirsen to forward in Europe?

Chris Garabedian

I’m sorry.

Sara Slifka – Morgan Stanley

What are your thoughts around moving eteplirsen to forward in Europe?

Chris Garabedian

Oh in Europe, okay. Well, I think we’ve communicated a lot about this, we have filed an appeal of a patent opposition that occurred in November 2011 in which we largely prevailed in validating a mechanistic claims and claims around nine of 11 exon targets remained. We did not prevail on two of the exon targets in that European patent opposition. That was exon 46 of which we think is less commercially relevant, because many of those patients for example exon 45 deletion can be treated by an exon 44 drug which we do have good freedom to operate.

The other one unfortunately that we did not prevail on was exon 51, we believe the European Patent Office made a mistake on this and while we filed an appeal and believe we can prevail on that, however, as you know the appeal process can be very lengthy. And so we will determine and look at a variety of strategies as we come to the close of this year, what is the status of the drives eteplirsen program and we will have more compiled with our dataset for an NDA filing and be more equipped to have a dialogue with the EMA for example, of the feasibility of a filing even if we maybe met with an infringement suite and wouldn’t commercialized for that reason.

But we think, look when you have a good drug for a devastating disease, because that we believe is differentiated and would be good for patients, we will do everything we can to find a way to make that drug that available.

Sara Slifka – Morgan Stanley

Okay, great. Do you have any data from patients who have been on eteplirsen and have come off? Do you know if there’s any kind of rebound effect?

Chris Garabedian

Well, so that’s a different question to answer. So we did do a U.K. study in which we had 12 weeks of eteplirsen dosed at various dose levels from 0.5 mg/kg up to 20 mg/kg, it was a short duration study, so too short to see any real clinical benefits, there was stability which is good, but you wouldn’t have necessarily seen a rapid decline in a 12 week period, so its hard to tease out if the clinical data supported the treatment effect. However, stability is good and there were a lot of anecdotes from parents and the boys in that study that they believe the drug was having an effect even in that short period of time.

We know that many of those have lost ambulation since going off the eteplirsen study and as far as I know in most of what I have heard from the investigators following these patients that the most that we’ve heard about is they have all deteriorated. So we think look this is a chronic disease, its going to require chronic treatment, even the drug the personal study, the intermittent arm where even just going on an off was no different than placebo.

So it looks like the idea of just dosing for a period of time and expecting long lasting benefits is not likely to happen and we know that half-life of dystrophin is only weeks long, two to four weeks half-life generally. So we expect we need to continue to dose to keep regenerating that dystrophin at steady state levels.

Sara Slifka – Morgan Stanley

Okay, great. And then maybe just in the last minute here, can you talk about other potential applications for your technology?

Chris Garabedian

Yes, we are very excited and committed in the DMD program, but we are even more excited about where this technology can go in the treatment of other diseases, our chemistry the Morpholinos and our advanced chemistries that we’ve been developing internally that have good IP protection, they are showing a lot of promise and we think have a lot of utility across translation suppression turning off gene translation, Splice switching, so modulating a protein – translation of proteins.

And so we think there is a lot of diseases that we are not ready to disclose today, but we have been working with academic collaborators doing some collaborations that will generate the next set of data that will lead to our future pipeline and so stay tuned because when we are ready we will be disclosing more of our potential future pipeline ahead.

Sara Slifka – Morgan Stanley

Okay great well we are just about out of time. So I think we will leave it there. Thanks everyone for coming and thanks Chris for the update.

Chris Garabedian

Thanks Sara.

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